Manawatu Daily Times World-Wide Deflation

Manawatu Times, Volume XLIX, Issue 3416, 4 August 1926, Page 6

Manawatu Daily Times World-Wide Deflation

According- to a cable from Washington a couple of days ago, farmers in the United States of America arc going through a crisis even more serious than the one experienced by producers in New Zealand. Farm prices, according to statistics published by the Department of Agriculture, dropped another four points between June 15th and July 15th, bringing the purchasing power of the farmers’ dollar thirteen cents below pre-war values. As a result of this further depression, many farmers are faced with ruin and bankruptcy, and the lot of the United States primary producers is anything but a happy one. The cause of this state of affairs is very much the same as it is in New Zealand. High prices of produce led to heavy inflation in land, followed by a rapid fall in the prices of farm products without a compensating drop in other commodities. In America, for instance, primary products decreased, fourteen points during the last year, while other decreased only four points in that period. It must be said to the credit of the United States Government that strenuous efforts have been made to come to the rescue of the farmers. A structure of economic protection has been built around America’s primary industries, and a tariff wall has been erected, effectively shutting out produce from foreign countries. On the other hand, huge sums have been made available for farm finance in an endeavour to check the drift to the cities. The attempts made by the United States Government to establish domestic markets for farm crops on an American basis and apart from world conditions and world competition have been severely criticised in this and other countries. But we should perhaps endeavour to realise the conditions prevailing among the farming communities in the States before passing judgment. For the past five years, there has been a great exodus from the land to the cities. In his report to the President, Mr Henry C. Wallace, Secretary of Agriculture for the United States, stated that over a million people left the land in 1923-24. Recently representatives of a number of the leading farm organisations in the United States published an open letter to “the President, the Congress, and the people of the United States” in which the statement is made that farmers were forced from their homes at the rate of 100,000 per month and ‘the process still is under way in all . its cruelty.” Country conditions, it is said, cannot be told in words. The hundreds of broken banks arc real, but the suffering which followed them is hidden in the haze of distance. And the cause of it all is looked for in a disordered world, emerging from war and unable to absorb the surplus production of American farms at prices commensurate with American standards. The remedy suggested is for the United .States of America to shut herself off from trade contact with the outer world—a course that may be said to be a remedy of despair. The prosperity brought by the war period to primary producers of the United States, and for that matter, throughout the world, proved very transitory and elusive indeed. Although the American State Advances system has advanced over 100.000,000 dollars -on farm mortgages, the general financial conditions of agriculture in the United States have not improved. On the contrary, greater distress than ever appears to prevail, especially in the Western and NorthWestern States. A Bill to grant a further 50,000,000 dollars for relief purposes was recently defeated by the Senate. In will be seen that farmers in New Zealand are not the .only ones faced with serious problems. On the Continent of Europe things arc not much better. Primary producers in Denmark, Germany, France and Britain arc all in a similar position, and everywhere may be seen indications of an overproduction of farm products at the present economic level of prices.